Boulder flood victims face challenges with insurance

Federal program does not cover all losses

Rebecca Hornbrook in her crawlspace which flooded during the recent storm in Boulder. She has had difficulty in getting reimbursed for the cost to repair the damage to her home.
(
Paul Aiken
)

Flood insurance claims process

Report the loss right away to your insurance company or agent. An adjuster will be assigned to inspect the structure, estimate the cost of repairs and submit the estimate for approval.

Submit proof of loss statement: The proof of loss is the property owner's sworn statement as to the value of the loss. It must be submitted within 60 days and should include both structure and contents, where contents are covered.

If you disagree with the adjuster, you can submit your own proof of loss form or attach a letter explaining why you disagree. However, it's important to return the form within 60 days.

Talk to your bank before you receive payment and ask them to put in writing that the payment will be dispersed to you.

If the contractor's price is higher than the adjuster's estimate, notify your insurance company right away. There can be numerous reasons for discrepancy. Whenever possible, get the contractor and the adjuster talking to each other about the cost of the repair.

If there is still a difference in the estimate, you can ask to speak to your adjuster's supervisor. Ask that a general adjuster -- independent contractors who do quality control for the National Flood Insurance Program -- look at your claim or file an appeal.

If you have questions about the estimate prepared by your adjuster, you can get help from an NFIP representative at the Disaster Assistance Center, 5495 Arapahoe Ave., as long as it remains open, or by calling the state Division of Insurance at 303-894-7490.

More info about the National Flood Insurance Program, go to floodsmart.gov.

Source: FEMA

Rebecca Hornbrook thought she was relatively fortunate. There was water in the crawl space of her east Boulder home for nearly two weeks after the epic rains earlier this month, but it didn't get into the house itself and she had flood insurance.

However, as she tries to repair her home and get a new furnace before it gets cold, she has found that her adjuster and the contractors she has contacted have very different ideas about the cost of repairs.

Her adjuster gave an estimate of $3,000. The bids she got from three different contractors ranged from $7,000 to $10,000.

"The lowest bid is more than double what the adjuster suggested," Hornbrook said. "I know there is gouging going on, but there is just this complete disconnect between the adjuster and the contractors."

Jeff Woodward, an insurance specialist with the National Flood Insurance Program, said policy holders need to understand that federal flood insurance doesn't work like the homeowners' policies available in the private market.

There are strict guidelines on what is and isn't covered, and adjusters don't have the flexibility to cover excluded items.

"It isn't a matter of how badly we want to," he said. "We would be violating federal law."

However, there can still be differences of opinion among adjusters, and policy holders do have recourse. They can ask to speak with an adjuster's supervisor or ask that a general adjuster review their case.

There is also a formal appeals process.

The first step, though, should be to get the contractor and adjuster talking to each other so they can figure where the costs are diverging, Woodward said.

Part of the disconnect in Hornbrook's situation is that every contractor recommended using dehumidifiers in the crawl space, while the insurance adjuster said dehumidifiers would be covered inside the house but not in the crawl space, which is technically outside the house.

"If it's outside the home, why were we pumping water out of it?" Hornbrook asked.

Woodward said he's never seen dehumidifiers used in crawl spaces before, but it's possible the arid climate and different soils in Colorado, compared to the Pacific Northwest or Southeastern United States, make it a reasonable measure.

Hornbrook's situation is under review.

Woodward, who was in Boulder last week working at the Disaster Assistance Center, said so far he has seen relatively few disputes over flood insurance. However, those disputes are inevitable, particularly later in the process, as some homeowners discover foundation damage and there is disagreement over whether it was caused by the flooding or pre-existing settling.

And there are several areas where homeowners don't always understand the limitations of their coverage.

Flood insurance only pays replacement cost if the home is the owner's primary residence and the home was insured for at least 80 percent of its value. Otherwise, flood insurance pays the actual depreciated value of the damaged items.

And flood insurance covers flood-damaged contents of a house, but not in a basement.

That's because the flood insurance program is first and foremost a floodplain management tool, Woodward said. The program was offered to communities that agreed to implement minimum building standards in the floodplain, including no basements.

However, older homes often still have basements. The federal flood insurance program is structured to discourage people from using their basements as living space. So utility items like hot water heaters and furnaces are covered, but furniture is not. (Freezers are covered, but not refrigerators.)

However, homeowners who suffer "substantial" damage to their home -- damage worth more than 50 percent of the replacement value of the home -- can get a boon.

They can get an extra $30,000, provided the total payout isn't more than $250,000, to cover the increased cost of compliance with current floodplain regulations when they rebuild.

Woodward said anyone with questions about the process can go to the Disaster Assistance Center, 5495 Arapahoe Ave., for as long as it's open. If an insurance specialist isn't available on-site, volunteers can get a specialist on the phone. After the center closes, people can use the state Division of Insurance to get in contact with representatives of the federal program.

Hornbrook said it's been difficult, as someone without expertise in flood restoration, to know how to negotiate between her adjuster and the various contractors.

"I just feel like if you have flood insurance, it should cover everything, and there should be consistency," she said. "Not everyone has several thousand dollars disposable income."

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